The disputed amount belonging to CPSEs being settled under the scheme is Rs 1,00,195 crore, while that from other taxpayers amounts to Rs 31,734 crore, sources added.
The amounts were disclosed during a high level meeting of the income tax department to review the progress made by the scheme on Wednesday,
Sources added further that a total of 45,855 declarations have been filed by other taxpayers, however the number of declarations filed by CPSEs is not known.
Net direct tax collections in the first six months of FY 2020-21 have been Rs 3.2 lakh crore, 31.5% lower than last year’s Rs 4.6 lakh crore. Of the collections, Rs 1.5 lakh crore has come through corporate tax and Rs 1.66 lakh crore through income tax. India had reduced the corporate tax rate to 22% for existing companies and 15% for new manufacturing units from FY 2020-21, if exemptions are not availed.
“There will be some cushioning of the shortfall due to Vivaad Se Vishwas scheme collections. But, Budget targets are unlikely to be met”
The Budget Estimates for FY 2020-21 for direct tax collection stand at Rs 13.2 lakh crore. Experts said that the deposits so far may provide some relief to the pressure on tax collection targets set for field units and overall by the government.
“There will be some cushioning of the shortfall thanks to the collections under Vivaad Se Vishwas. However given the cut in corporate tax rates and the impact of Covid, it may be unlikely that collections will breach the target set in the Budget,” said Rohinton Sidhwa, tax partner at Deloitte India.
The department has decided to adopt a proactive approach for implementation of the Scheme by regular monitoring of issue of Form 3 to taxpayers who have filed declarations, completing any pending rectifications or giving appeal effects for finalization of demand.
The department will also launch an e-campaign to inform taxpayers about the scheme, guiding and facilitating them in filing of declarations and removing any difficulties or problems faced by them in availing the Scheme, sources added.
“The deadline for filing of declarations under the scheme has been extended to December 31 and the deadline for payment has been extended to March 31, 2021”
Consequent to declaration under the scheme and on fulfillment of conditions, all appeals are withdrawn by taxpayer and department.
Due to the situation created by the Covid-19 pandemic, the deadline for filing of declarations under the scheme has been extended to December 31, 2020 and the deadline for payment without paying any interest and penalty has been extended to March 31, 2021.
Experts added that the extension will provide more time to taxpayers to settle under the scheme, and would hence lead to higher collection for the government through the dispute resolution.
The Vivad se Vishwas direct tax dispute resolution Scheme was launched on March 17, 2020 after approval of the Parliament with the objective of reducing litigation.
The Scheme provides for settlement of disputed tax, disputed interest, disputed penalty or disputed fees in relation to an assessment or reassessment order on payment of 100% of the disputed tax and 25% of the disputed penalty or interest or fee.
The taxpayer is granted immunity from levy of interest, penalty and institution of any proceeding for prosecution for any offence under the income-tax act in respect of matters covered in the declaration.